Federal Reserve Blog

Beige Book: True to its name

The latest economic roundup prepared for the Federal Reserve's mid-December meeting is true to its name: the Beige Book. It might even be a bit bland, like hospital food.

Looking for CSI-quality new evidence that the central bank will begin to ease off its own steady diet of $85 billion in asset purchases aimed at juicing the economy? Sorry, the evidence looks all too familiar. The report uses familiar "Fed-speak" terms describing economy expansion around the country as divided between "modest" and "moderate."

Jim Chessen, chief economist at the American Bankers Association, says "it's a slow and steady economy. That's what it's going to be for many quarters to come." The biggest thing holding companies back from hiring is "uncertainty," he says.

The U.S. economy has faced a series of headwinds this year, including forced budget cuts (known as the sequester), the October partial government shutdown and more looming budget deadlines in the coming months.

Ken Simonson, chief economist at Associated General Contractors of America, says more than half the Fed districts logged "moderate" growth, or stronger than "modest." He notes that none had a "downturn in economic activity."

Job market looking up?

The Fed says hiring saw "a modest increase or was unchanged" across the nation. Simonson says that suggests "no backsliding" amid the challenges. Growth was seen in construction, software and information technology services, manufacturing and health care. In a refrain that was repeated from Philadelphia to Dallas, "some employers" were said to be "having difficulty finding qualified workers for certain permanent, high-skilled positions." Rising pay was seen for craft labor, engineering, information technology and accounting.

Chessen says employers would boost hiring if they had better clarity about future tax laws or health care costs. "I think businesses have been stuck, and they're not anxious to expand," says Chessen.

Bernanke's closing acts

The upcoming meeting, scheduled for Dec. 17 and Dec. 18, marks the last news conference where Chairman Ben Bernanke will address reporters after release of the official statement. While it is commonly expected that the Fed might begin scaling back on bond purchases in March, Simonson says the latest Beige Book won't sway members of the Federal Open Market Committee. "Boy, that's anybody's guess. You could look at this either way," he says.

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